Many items live in your wallet, don’t they? Some of these are prepaid, debit, or credit cards. If you look a little closer at each of your cards, you might find that they feature the Visa or Mastercard logo, among others. These logos have become such a normal feature of our lives that we rarely stop to think about them. For example, is there a difference between a Visa and Mastercard card? And if so, which card should you get?
If you’ve found yourself asking these questions, then this post is for you. But before we get started, it’s a good idea to clarify a couple of things.
Not a card issuer but a payment network
They accepted both Visa and Mastercard in over 210 countries and territories around the world, and they are the world’s largest payment networks. But what’s a “payment network”? Isn’t it the same as the bank that issues your cards? In short, the answer is “no”. As payment networks, Visa and Mastercard “process payments for purchases made using credit and debit cards”. However, they are not card issuers.
Banks and credit unions are the ones who issue the cards. They also set the interest rates, charge certain fees and offer rewards. What does this mean in practice? Essentially, it means that when you pay your credit card account at the end of the month, you’re paying it to your bank which issued your card and not to Visa or Mastercard. The latter are the “liaisons” between financial institutions and merchants. Whenever you swipe a Visa or Mastercard card, the respective network processes the transaction. This means that it’s either of them that transmits the information that makes your payment go through.
Putting it in perspective with some interesting stats
Let’s go back in time for a moment. 2016 to be precise. This is when global purchase transactions for Visa accounted for $139 billion while for Mastercard this was $67.3 billion. Fast-forward to 2019, and Visa generated $23 billion in total revenue with a payment volume of $8.8 trillion.
Meanwhile, Mastercard generated $16.9 billion in total revenue with a payment volume of $6.5 trillion. About 33 million merchants around the world accept both payment networks. In addition, the market share for Visa is 48.50% while for Mastercard it stands at 31.70%.
Online shopping has become a massive trend, especially after the onset of the Covid-19 pandemic. But with increased online shopping arose increased online risks. Therefore, it’s important to stay protected online and both Visa and Mastercard offer online protection from card fraud in an online shopping scenario. Whereas Visa offers the Verified by Visa scheme, Mastercard uses the Mastercard SecureCode for extra security. But how does this protection work in practice?
Sources indicate that you need to use “reasonable care in protecting your card and information.” In addition, you also need to report any losses to your card provider as soon as possible. So, regularly checking your bank statements for irregular card activity is crucial. As opposed to debit cards, credit cards have a feature that provides you with $0 liability. What does this mean in the actual world? Essentially, it means that if an unauthorised person gets hold of your card or card details, neither Visa nor Mastercard will require you to pay for it. There’s one caveat though – you need to contact your card issuer immediately or as soon as possible after the fraudulent act.
So far, you might be thinking – but there aren’t many differences between Visa and Mastercard – and you would be right. Both offer online protection. But what other features are there from these payment networks and how are they similar or do they differ? Let’s take a look.
- Protection against unauthorised expenses – if your credit card is used by an unauthorised individual to make an unauthorised purchase, you need to report it to your card issuer in order to have the transaction reversed. Visa or Mastercard will cover your costs.
- Wavers for rental car collision damage – if you choose to decline a rental company’s collision insurance, you can rent the vehicle using your Visa and Mastercard and you’ll be eligible to receive collision insurance. However, you will need to pay for the transaction with your Visa or Mastercard card. Make sure you read the fine print!
- Refund protection and extended warranties – this is another standard feature offered by both payment networks that provides you with protection when purchasing an item that may be damaged, lost or stolen. It’s important to note at this juncture that you should also check your issuer’s policy for refunds and warranties as well.
Benefits and rewards
Despite the similarities mentioned above, the major areas where Visa and Mastercard differ the most are when it comes to benefits and rewards. The more basic cards offer some of the standard features mentioned above. However, the more premium the card, the more perks you’re likely to enjoy. These perks can range anywhere from concierge services, global customer assistance, free insurance products, privileges at stores, hotels, restaurants, and much more. These will also depend on your card issuer, too. For example, Visa offers reductions on car hire and discounts on some holidays or hotels. Meanwhile, Mastercard offers the Priceless cities experiences, which enable you to physically or digitally visit highly rated restaurants or take art tours of a city.
Other common benefits for Mastercard include price protection, concierge services, perks at hotels and resorts such as late checkout, room upgrades, complimentary breakfasts, and better exchange rates when you make purchases abroad. Visa, on the other hand, can offer you lost luggage reimbursement, signature luxury hotel collection, and others.
Concluding thoughts – which card should you choose?
After all, that’s been said about Visa and Mastercard, which credit card should you choose? You should actually not decide the answer to this question based on the payment network. Rather, you better consider your card issuer’s interest rate, annual fees, charges, and card features, as opposed to the brand. Other factors to keep in mind include sign-up bonuses, 0% interest introductory periods, cashback, and rewards.
The key differences between Visa and Mastercard are the perks and benefits offered. Just remember that you need to pay off your monthly interest rates on time every time, otherwise the interest charged could outweigh the value of the rewards. When it comes to choosing a debit card, on the other hand, you need to consider making your decision based on which current account meets your needs.